| Planning Commission deputy chairman Montek Singh Ahluwalia in New Delhi on Monday. (PTI)
New Delhi, July 5: Providing a peek into what the Union budget could look like, the Planning Commission today asserted that hard decisions and attempts to pump up farm growth would be the keys to the Congress-led government’s bid to put GDP growth back on the fast track.
Although the commission did not spell things out clearly, there were enough indications that hard decisions — like pruning the fiscal deficit — will in all likelihood be blended with populist measures like raising the tax exemption limit for salaried employees in a manner that combines Chidambaram’s hell-or-glory fiscal management style with Manmohan’s more ponderous but steady approach.
However, there are limits to the hard decisions that can be taken and the plan panel acknowledged that too. Newly appointed Planning Commission deputy chairman Montek Singh Ahluwalia said wryly, “The environment is not very conducive for the required public-private partnership to achieve the desired level of infrastructure (growth) in the country.”
The environment continued to be “tough” today with the Left continuing to oppose key “hard decisions” which they feel could hit middle class badly like privatisation of airports, lowering of provident fund earnings and labour laws.
“Proper reading of the last election’s verdict must be made ... we will certainly raise our voice on issues which affect the people,” said CPM leader Nilotpal Basu.
But then these were given factors in the budget-making equation. It is farming — the growth driver last year — which is now giving budget makers and planners sleepless nights despite the mega-packages announced and that on the anvil for farmers.
“Agricultural performance is a matter of deep concern ... the Prime Minister too is worried...If it is does not turn around, achieving the targeted growth of 7-8 per cent by the government will be difficult,” Ahluwalia said here.
Despite forecasts of a bumper monsoon this year, Singh and his colleagues in the cabinet are worried that farm growth may not account for much in the years to come and, in fact, may well turn out to be a mirage.
The reason is simple: all growth figures trotted out this year could pale into insignificance after last year’s blistering farm growth of 9.1 per cent on the back of another good monsoon after a drought-induced over 5 per cent shrinkage in 2002.
The plan panel as well as the World Bank have been warning for the last few years that falling public investment in farming and dwindling of credit to the rural sector could lead to a shrinkage in farm output and incomes which any number of good monsoons may not be able to rescue.
With more than a quarter of the GDP being accounted for by the farm sector and farm-led demand being crucial to growth in the country's nascent consumer industry, the worry lines on the brows of the mandarins in North Block and Yojana Bhavan have as much to do with the health of India Inc as with the news of farmers committing suicide in remote areas of Andhra Pradesh.